The information set forth in Items 3 and 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 4.
On August 13, 2023, Philips and Exor entered into a relationship agreement (the “Relationship Agreement”) in order to regulate the relationship between the Issuer and the Reporting Persons. Pursuant to the terms of the Relationship Agreement, Exor and Philips have agreed, amongst other things and subject to certain limitations as set forth therein:
| | • | | Stake: Exor has fifteen percent (15%) of the issued and outstanding ordinary shares and the voting rights in respect thereof, with the possibility to further increase the amount of ordinary shares and the voting rights in respect thereof legally and/or beneficially held up to twenty percent (20%). |
| | • | | Board Composition: Exor has the right to designate for nomination to the Supervisory Board of Philips (the “Board”) one person on behalf of itself for as long as the combined equity interest of Exor and its affiliates in Philips equals or exceeds 15% (subject to certain exceptions) and unless such right has expired in accordance with the Relationship Agreement. |
| | • | | Standstill Provisions: Exor is bound to customary standstill restrictions for the duration of the Relationship Agreement and 18 months thereafter. |
| | • | | Lock-Up Period: For a period of three years following the date of the Relationship Agreement (the “Lock-Up Period”), EXOR shall not take any action that causes the combined equity interest of Exor and its affiliates in Philips to fall below 15%, subject to limited exceptions. |
| | • | | Orderly sell down: Exor and Philips have agreed to certain orderly sell down restrictions, following expiry of the Lock-up Period. |
| | • | | Non-compete: Exor shall not make equity investments in certain competitors of Philips exceeding 2% of such competitor’s total issued share capital, without the prior consent of Philips. |
| | • | | Term: The obligations of Exor and Philips under the Relationship Agreement shall automatically terminate, amongst others, upon Exor losing its right to nominate a member of the Board or Exor’s nominee ceasing to be a member of the Board without having nominated a replacement, provided that certain provisions will continue to be applicable for a limited period after termination. |
This summary description does not purport to be complete, and is qualified in its entirety by reference to the Relationship Agreement, a copy of which is filed as Exhibit 99.2 of this Schedule 13D.
The principal objective of the Reporting Persons’ investment in Philips is to provide stable and committed support for Philips’ long-term value creation plans, and to increase their presence in the healthcare and technology sectors.
Except as described in this Schedule 13D, the Reporting Persons do not have any present plans or proposals that relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, although, subject to the agreements described herein, the Reporting Persons, at any time and from time to time, may review, reconsider and change their position and/or change their purpose and/or develop such plans and may seek to influence management or the Board of Philips with respect to the business and affairs of Philips and may from time to time consider pursuing or proposing such matters with advisors, Philips or other persons.
Accordingly, the Reporting Persons reserve the right to develop, modify or change their respective plans as they deem appropriate. For example, the Reporting Persons may at any time and from time to time (1) acquire additional securities of Philips in open market or privately negotiated transactions or pursuant to the exercise of warrants, stock options or convertible or exchangeable securities; (2) dispose of such securities; (3) enter into privately negotiated derivative transactions with institutional counterparties to hedge the market risk of some or all of its positions in such securities; and/or (4) continue to hold such securities for investment purposes. Any such transactions may be effected at any time and from time to time. In reaching any determination as to its future course of action, the Reporting Persons may take into consideration various factors, such as Philips’ business and prospects, other developments concerning Philips, other business opportunities available to the Reporting Persons, and general economic and stock market conditions, including, but not limited to, the market price of the Shares of Philips.
Representatives of the Reporting Persons may conduct discussions from time to time with one another as well as with management of Philips, Philips’ other shareholders and/or other relevant parties, including other companies that operate in the business and markets in which Philips conducts its businesses, in each case relating to matters that may include Philips’ strategic plans, business, financial condition, operations and capital structure. The Reporting Persons may engage with any of the parties listed above in discussions that may include one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. As a result of these activities, the Reporting Persons may suggest, or take a position with respect to, potential changes in the operations, management or capital structure of Philips as a means of enhancing shareholder value. Such suggestions or positions may relate to one or more of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D under Rule 13d-1(a), including, without limitation, such matters as disposing of one or more businesses; selling or merging Philips or acquiring other companies or businesses; changing strategies; adopting, not adopting, modifying, or eliminating certain types of anti-takeover measures; modifying Philips’ capitalization; reviewing dividend and compensation policies; entering into agreements with third parties relating to acquisitions of securities issued or to be issued by Philips; entering into agreements with Philips relating to acquisitions of shares in Philips by members of management, issuance of options to management, or their employment by Philips.
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